- DXY bounces back from 3-month lows and re-visits 97.60.
- The US ADP report exceeded expectations in May.
- Markit services PMI, factory orders then on file.
the US dollar index ((DXY), which follows the greenback against a basket of its main rivals, remains on the defensive although it succeeded in reducing the initial losses and in recovering the area of 97.60 at the time of writing.
US dollar index weaker due to risk appetite
After hitting a low in the 97.30 / 25 band at the start of the session, the index managed to regain some composure, as the feeling of risk seems to take a break before the opening bell of Wall St .
As usual in recent weeks, the mood of the riskiest assets continues to support the safe haven dollar exits in favor of its riskier peers. This decision has always been supported by the relentless return to life of the global economy.
In the United States, the ADP report surprised on the upside and showed that the private sector had lost nearly 2.8 million jobs in May, significantly less than the drop of 9 million expected and well below 19, 5 million April.
Later in the NA session, factory orders for April must be supported by Markit’s final services PMI in May and the non-manufacturing ISM.
What to Look for around the USD
The greenback remained under strong pressure at the start of the month, extending the bearish trend well below the 98.00 mark and still in the context of the strong sense of risk on the world markets. In the meantime, the dollar remains vigilant on the American-Chinese trade front, the gradual return to a kind of normalcy in the American economy and the broader tendencies of risk appetite as the main drivers of the action of the price. On the constructive position around the male, the episodes of risk aversion should support investors’ preference for the greenback as a safe haven, as well as its status as a global reserve currency and a store of value.
Relevant levels of the US dollar index
Currently, the index is losing 0.14% to 97.55 and faces immediate contention at 97.29 (June 3 monthly low), followed by 97.11 (November 1 monthly low 2019) and finally 96.33 (December 31, 2019 monthly low). On the other hand, a break of 98.49 (SMA 200 days) would target 99.04 (SMA 100 days) and finally 99.98 (May 25 high).